Friday, March 23, 2018

The Cuban Cooperative From Proletarian Corporation to State Related Enterprise: Thoughts on Marc Frank, Cuba cracks open wholesale food sales for state-linked cooperatives (Reuters) [La cooperativa cubana: desde la posibilidad de una forma de corporación proletaria transformada en empresa indirectamenta estatal: reflexiones sobre Marc Frank, Cuba abre la venta mayorista de alimentos para las cooperativas vinculadas al estado (Reuters)]

In the wake of the opening up of the economy at the start of the leadership of Raúl Castro, the high point of which was the development of the Guidelines for Economic Reform of 2011 (Lineamientos de la política economia y social del Partido y la Revolución (18 April 2011)), the Cuban Party-State appeared to be on the cusp of at least a small but potentially significant willingness to allow non state actors to aggregate labor (but not capital) for the purpose of developing a limited markets based private sector.  The cooperative appeared to be the PCC's  answer to the question: is it possible to create a viable proletarian corporation in a traditional European Marxist Leninist system? [A raíz de la apertura de la economía al inicio del liderazgo de Raúl Castro, el punto culminante fue el desarrollo de las Pautas para la Reforma Económica de 2011 (Lineamientos de la política económica y social del Partido y la Revolución 18 de abril de 2011), el Partido-Estado cubano parecía estar en la cúspide de al menos una voluntad pequeña pero potencialmente significativa de permitir que actores no estatales agreguen mano de obra (pero no capital) con el fin de desarrollar un sector privado basado en mercados limitados. . La cooperativa parecía ser la respuesta del PCC a la pregunta: ¿es posible crear una corporación proletaria viable en un sistema Marxista Leninista europeo tradicional?]

As hopeful as that might have been (see, e.g., here) the opening was limited in some key ways.  First, the state retained a monopoly on the use of the corporate form.  Second, the state continued to tightly control the form and operations (including pricing) of cooperatives.  And third, cooperatives were still strictly limited to the occupations for which licenses were permitted (roughly about 200 very specific occupations).  [Por muy esperanzado que haya sido (ver, por ejemplo, aquí), la apertura fue limitada en algunos aspectos clave. Primero, el estado retuvo el monopolio sobre el uso de la forma corporativa. En segundo lugar, el estado continuó controlando estrechamente la forma y las operaciones (incluido el precio) de las cooperativas. Y tercero, las cooperativas todavía se limitaban estrictamente a las ocupaciones para las cuales se permitían las licencias (aproximadamente unas 200 ocupaciones muy específicas).]


In "The Cooperative as a Proletarian Corporation: The Global Dimensions of Property Rights and the Organization of Economic Activity in Cuba," Nw. J. Int'l L. & Bus. 33(3):527-618 (2013), I suggested the promise of this effort, but, given the tenor of the initial regulations also suggested challenges in light of the conservatism inherent in Cuban style Marxist Leninist theory. I concluded that, for all its promise, the normative constraints of Cuban political culture posed a substantial risk of disappointment. [En "La cooperativa como una corporación proletaria: las dimensiones globales de los derechos de propiedad y la organización de la actividad económica en Cuba", Nw. J. Int'l L. & Bus. 33 (3): 527-618 (2013), sugerí la promesa de este esfuerzo, pero, dado el tenor de las regulaciones iniciales, también sugería desafíos a la luz del conservadurismo inherente a la teoría marxista-leninista de estilo cubano. Llegué a la conclusión de que, a pesar de su promesa, las limitaciones normativas de la cultura política cubana planteaban un riesgo sustancial de desilusión.]

The cooperative arose as a part of a solution to the stresses on the Cuban economic model that sought to retain its socialist character while also acknowledging that the conventional system of direct state control of virtually all aspects of economic activity was not working. But the solution was constrained by the conceptual limits of restructuring, one in which the State would retain the power to aggregate capital and in which private economic activity was conceived as limited to a small and local retail sector. [La cooperativa surgió como parte de una solución a las tensiones en el modelo económico cubano que buscaba conservar su carácter socialista al tiempo que reconocía que el sistema convencional de control estatal directo de prácticamente todos los aspectos de la actividad económica no funcionaba. Pero la solución estaba limitada por los límites conceptuales de la reestructuración, uno en el que el Estado conservaría el poder de agregar capital y en el que la actividad económica privada se concibió como limitada a un sector minorista pequeño y local.]

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As long as Cubans continue to politicize the property component of corporate ownership, and split economic aggregation between aggregations of capital in corporate form operated as instrumentalities of the State, and aggregations of labor operated as highly regulated private cooperatives, it will not be able to meet its objectives under the Lineamientos or realize the promise in the new regulations. If the State is the only capitalist and labor is dependent on the State for the ownership of the fruits of the cooperative’s efforts, then the structural asymmetries of a capital-privileging regime remains.Yet reinforcing this system of State capitalism supported at the margins by labor cooperatives perpetuates the dominance of capital in a socialist society, denies the cooperative the space to meet its potential to rebalance the relationship between labor and capital in production, and ultimately may make it much more difficult for the functional realization of the potential of this experiment in cooperatives. [  Mientras los cubanos continúen politizando el componente de propiedad de la propiedad corporativa, y dividan la agregación económica entre agregaciones de capital en forma corporativa operadas como instrumentos del Estado, y las agregaciones de mano de obra operadas como cooperativas privadas altamente reguladas, no podrán cumplir sus objetivos bajo los Lineamientos o realizar la promesa en las nuevas normativas. Si el Estado es el único capitalista y el trabajo depende del Estado para la propiedad de los frutos de los esfuerzos de la cooperativa, entonces las asimetrías estructurales de un régimen privilegiado en capital permanecen. Sin embargo, reforzar este sistema de capitalismo de Estado apoyado en los márgenes por el trabajo las cooperativas perpetúan el dominio del capital en una sociedad socialista, niegan a la cooperativa el espacio para alcanzar su potencial de reequilibrar la relación entre trabajo y capital en la producción, y en última instancia pueden hacer mucho más difícil la realización funcional del potencial de este experimento en cooperativas.]
Recent reporting by Marc Frank in Cuba suggests that these fears have become well founded in the face of what appears to be an increasing retreat by the Cuban state from the opening of the 6th PCC Congress and reaffirms the conservative turn of the 7th PCC Congress.  The article, Marc Frank, Cuba cracks open wholesale food sales for state-linked cooperatives, Reuters (23 March 2018) follows. YouTube video HERE.

Marc Frank,

"Cuba cracks open wholesale food sales for state-linked cooperatives"

Reuters (23 March 2018)
HAVANA (Reuters) - Cuba's first wholesale outlet to supply former state-run eateries that are now cooperatives opened for business this week in Havana, a slap in the face to private start-ups that face higher costs.

· Interior Trade Minister Mary Blanca Ortega Barredo told state-run media at the weekend that the wholesale model would eventually go nationwide and include hundreds of smaller coffee, snack and other former state outlets now rented to the employees or interested individuals.

· She did not mention private initiatives that were not originally state-run.

· The move puts the private eateries that have emerged under market reforms to the Soviet-style command economy at a further competitive disadvantage, given the government has yet to deliver on its decade-old promise to provide them wholesale outlets.

· The first wholesale outlet will sell staples such as rice, beans and sugar, as well as soft drinks, beer, hamburger, chicken and sausage to the state-eateries turned cooperatives at a 20 percent to 30 percent discount.

· The government of President Raul Castro, who is due to step down in April, introduced cooperatives five years ago as an experiment, and a few dozen Havana state restaurants were ordered to go co-op in 2015.

· The premises were leased to original employees who were given the option of other work if they were not in agreement.

· Marino Murillo, head of the ruling Communist Party’s reform commission, said at the time that they would compete on a level playing field with private restaurants, but soon announced they would receive tax breaks as they were "a more socialized form of production."

Then, the government said in 2016 that "in the interest of protecting consumers," the co-op restaurants would receive a quota of lower-priced products such as soft drinks, beer and chicken in exchange for guaranteeing relatively low prices. The co-ops Two people with knowledge of Havana's restaurant system who requested anonymity said the new move had been taken because the co-ops found their quotas were running out quickly and state-retail markets, where private eateries must purchase supplies, too expensive.

"To avoid bankruptcy and keep prices low they turned to the black market," one source said.

The other source said the new model was somewhat similar to cooperative bus transportation in the Cuban capital, where in exchange for set fares they receive lower-priced fuel and parts.

The state, which has a monopoly on trade, owns thousands of restaurants, which have access to its wholesale system.

There are also around 100 cooperative restaurants and 2,000 private ones, all deemed to be part of the non-state sector, which, excluding agriculture, now counts nearly 600,000 "self employed" individuals out of 11.2 million residents.

Cuba lumps everyone not directly working for the state as "self-employed," regardless of whether they are employers or employees, cooperative members or individual tradesmen and kiosk operators.

The government last August declared a pause on licensing new cooperatives and private eateries, among other activities, on the grounds that the non-state sector needed improved regulation.

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